IT Min for Review of Duty on Electronic Components

Bangalore: The IT ministry has sought changes in the duty structure for import of components so as to promote domestic manufacturing of electronic products, communications and IT minister Kapil Sibal said.

"It is cheaper to import the components with zero duty and sell the product rather than manufacture them here. So something needs to be done by the finance ministry on the duty structure to make it less attractive for people to import and develop the manufacturing industry in India," Sibal told reporters in New Delhi.

As per international agreements, there are no duties imposed on most of the IT and telecom products. Electronic-product makers, however, are required to pay duties on importing components, making manufacturing an unviable proposition in the country. Electronic-product makers have been seeking a level playing field vis-a-vis their overseas counterparts.

Sibal said if domestic manufacturing is not encouraged, the import bill for electronic products will reach U.S.$320 billion by 2020, which will be even higher than the import of crude oil. "I am sure the finance ministry will give encouragement to Indian industry... In the ultimate analysis, it is a question of job creation... Unless we create jobs in India, how the young are going to be empowered," Sibal added.

That apart, the minister said the government is in the final stages of negotiations with electronic-chip makers for setting up of a high-tech chip making facility in the country this year. "We have to set up a fab (electronic chip fabrication) unit here in this year. Negotiations are on. We will have proposal very soon in our office. We will take it for Cabinet approval for that fab," Sibal said while unveiling a one-year agenda of the department of electronics and IT (DEITY).

The project to set up two semiconductor plants in the country was approved by the Cabinet. It envisages investment of around 25,000 crore. The exact level of government support for setting up these plants has to be decided through negotiations with chip-makers.

Besides, the government also expects to attract investment of 25,000 crore in the electronics sector from around 100 individual units to be set-up in 10 manufacturing clusters this year.